In conversation with Rishi Anand, MD and CEO of Aadhar Housing Finance Ltd

In this exclusive interview, Rishi Anand, MD and CEO of Aadhar Housing Finance Ltd professes that the housing industry in India is positioned for long-term growth, not just for a few years, but for decades to come.

What key factors contributed to the company's impressive quarterly revenue of Rs. 713 crore, reflecting a significant 20 per cent year-on-year growth, along with a 37 per cent surge in net profit? Could you also provide insights into other key financial metrics?
The company's impressive quarterly revenue of Rs 713 crore, reflecting a 20 per cent year-on-year growth, and a 37 per cent surge in net profit are driven by several factors. Our extensive distribution network of 536 branches across 21 states establishes us as the only pan-India low-income housing finance company. Strategic investments in technology and data analytics have enhanced operational efficiencies, while our targeted impact strategy in five key states has provided additional growth momentum.

The key financial metrics which highlight our strong performance include Assets Under Management (AUM) which grew to Rs 21,726 crore (21 per cent growth year-on-year), and the active customer base expanded to 275,000. Profit After Tax (PAT) reached Rs 200 crore, up 37 per cent year-on-year. Net worth closed at Rs 5,633 crore, with ROA improving to 4.1 per cent and ROE at 15.9 per cent. Additionally, the Gross Non-Performing Assets (GNPA) decreased to 1.3 per cent, down from 1.46 per cent year-on-year, a 15-basis point improvement.

Could you elaborate on the company's product portfolio and its performance, as well as the details of disbursements for the most recent quarter?
Aadhar, being a housing finance provider, primarily focuses on home loans, which constitute the majority of its product portfolio. In addition to home loans, the company offers loans against property, specifically Micro LAP (Loan Against Property) with an average ticket size (ATS) of Rs 8 lakh. Currently, the average ticket size at the AUM level is Rs 10 lakh, and the incremental average is Rs 11.5 lakh. At the book level, the ratio of home loans to loans against property is 75:25.

For the most recent quarter, disbursements totalled Rs. 1,500 crore. Our customer segment split at the AUM level is 57 per cent salaried and 43 per cent self-employed. The portfolio is well-diversified, with no single state contributing more than 15 per cent to distribution or AUM, mitigating concentration risk. The top two states account for only 28 per cent of the total AUM, demonstrating our balanced approach to market presence.

What are the company’s strategies for taking a cautious approach in Bihar, Jharkhand, and West Bengal while expanding into rural markets, and how do these plans benefit the company in the long term?
We are strategically focusing on semi-urban and urban locations rather than venturing into typical rural markets involving rural properties or rural incomes. Our company is expanding into smaller districts and talukas under a "deeper impact" strategy, initially targeting five states – Rajasthan, Andhra Pradesh, Maharashtra, Uttar Pradesh, and Telangana. As of the quarter's end, we have approximately 150 low-cost branches in these areas, generating lower ticket-size business with an average ticket size (ATS) of less than Rs 6 lakh.

Contrary to a cautious approach, our operations in Bihar, Jharkhand, and West Bengal were established during our first and second years. While growth in these states aligns with urbanization levels, it is not as rapid as in states like Tamil Nadu, Rajasthan, and Madhya Pradesh. We anticipate that key government initiatives, such as "Housing for All," will drive supply and demand in these regions, positioning them as future growth centres for the company.

What are the top three strategic priorities currently being focused by the company?
The company's top three strategic priorities are focused on driving growth and maintaining financial stability.

First, we are expanding our distribution network through a "deeper impact" strategy, aiming to open 75 new branches annually, with 50 in targeted deeper impact areas and 25 in Tier 1 and Tier 2 cities. Second, we are leveraging technology and data analytics to enhance efficiency and productivity across all functions.

Third, we are committed to maintaining and sustaining asset quality by managing collections in-house and keeping the GNPA levels below 1.2 per cent. These priorities are designed to support long-term growth and operational excellence.

What is your outlook for India's housing finance industry, particularly given that mortgage penetration in India remains lower compared to other economies?
The Indian housing finance industry has experienced significant growth over the past decade, with mortgage-to-GDP penetration increasing from below 8 per cent to nearly 12 per cent. The sector has grown over 14 per cent in the last five years, and similar growth is expected over the next three years.

Various initiatives by the central and state governments, as well as regulatory measures on both the supply and demand sides—such as the Interest Subsidy Scheme (formerly CLSS), the construction of 3 crore houses, GST reduction, stamp duty rationalization, and lower risk weightage—are further driving demand. Additionally, rapid urbanisation and rising disposable incomes are key factors contributing to the sector's growth. The housing industry in India is positioned for long-term growth, not just for a few years, but for decades to come.

The growth of housing finance companies will depend on their target consumer segment, ticket size, and current book size. Large AUM companies with higher average ticket sizes (LMI and Premium segments) are expected to grow at approximately 10-12 per cent, while companies with lower AUM but higher ticket sizes should see growth rates of 14-15 per cent. Affordable housing finance companies with higher AUM are expected to grow over 20 per cent, while those with lower AUM could grow comfortably at 24-25 per cent.